U.K. insurer Aviva would get a foothold in the U.S. if it buys life insurance and annuity company AmerUs, but analysts warn that a deal would not give Aviva a presence in the country’s most attractive markets.

A deal would boost Aviva’s presence in the U.S. market, which its management has identified as being the biggest life and pensions market during the next 20 years. “Aviva don’t have much in the U.S. – what it has is traditional annuities sold through banks,” says Mikir Shah, equity analyst at investment bank Fox-Pitt, Kelton. “The deal would provide a foothold in the U.S., but it is not necessarily with the right product, scale or distribution. AmerUs deals in equity-indexed annuities. But that is still a way from variable annuities, which is where most companies want to be.” A deal could, however, be a useful first step to building up its U.S. operations. “It would provide Aviva with the infrastructure from which to build,” says Shah.

AmerUs confirmed on July 7 that it was in discussions with Aviva, the world’s sixth-largest insurer and the U.K.’s largest, about a possible acquisition. But AmerUs said in a statement, “There can be no assurance that these discussions will result in a transaction.” Press reports suggest Aviva could pay about £1.5 billion (US$2.8 billion) for the firm.

Greig Paterson, equity analyst at Keefe, Bruyette & Woods, said in a research report that he does not believe AmerUs would create much value for Aviva. He also does not think a deal would signal a large U.S. acquisition in the future. But he adds that the announcement of a potential deal may be a ploy to reduce the share price of fellow U.K. insurer Prudential, with which Aviva called off merger talks in March.

“Another possible way of looking at this transaction is that Aviva’s management is trying to signal that it does not need Prudential to achieve its strategy,” said Paterson. “This could be an attempt to remove the current acquisition premium we see factored into Prudential’s price. If this is achieved then we could see a bid for Prudential in the future. We see a deal of this nature as strategically positive.”

AmerUs’s total assets as of March 31 this year were US$24.7 billion and shareholders’ equity was US$1.7 billion.